March 4, 2024

Multifamily office Cresset has nearly $33 billion in assets under management after acquiring a majority stake in a company it invested in as a minority three years ago.

Headquartered in San Francisco real capital managementwith $1.7 billion in client assets serving more than 350 clients, primarily professional athletes and entertainers, merged into Chicago-based torch In a deal of undisclosed size, The company said on May 9. In February 2020, a subsidiary of Cresset invest in truewhose clients include current and former athletes Albert Pujols, Marshawn Lynch, Diana Taurasi, Richard Sherman, Neka Ogumek, DeAndre Ayton, Robert Griffin III, Logan Ryan, Kelsey Plum and Brianna Stewart.

The total number of M&A deals was down 20% from last year, but Number of companies with at least $1 billion According to investment bank and advisory firm Echelon Partners, there has been a surge in the number of client assets changing hands ahead of the first three months of 2022.

True’s principal owners, Heather Goodman and Doug Raetz, have been working with athletes for 20 years, dating back to before they started a registered investment advisory firm at Smith Barney day. True, which acquired a company last year that caters to country musicians, is looking to further expand its reach under Cresset to entertain Hollywood directors and actors, in addition to football, basketball, baseball, golf and hockey players. .

“It provides high-quality service to people who need it,” Goodman said in an interview. “There are so many verticals that can be leveraged.”

Deals fell 19 year-over-year to 75 in the first quarter, according to Echelon, which estimated in its latest tracker that the number will reach 315 by the end of the year. In 2022, the transaction volume will set a record of 341 transactions for the 10th consecutive year.

flow Has been gradually reduced until 2023 At a time when higher interest rates lead to more expensive capital and greater fears of a potential recession. Still, the number of deals involving firms with at least $1 billion in client assets soared 94% after “a quarter of significant mega-deals,” according to the Echelon report. So far this year, deals have launched companies with about $1.2 trillion in assets, accounting for 61% of total assets for all of 2022.

Companies that manage at least $1 billion in client assets are “particularly attractive to acquirers because they often have experienced management and mature processes and platforms,” ​​the report said. “Our research suggests that the fact that buyers are being selective when considering acquisitions in the face of rising borrowing costs and economic uncertainty may benefit owners of $1 billion-plus wealth managers.”

According to Julie Littlechild, CEO at Julie Littlechild, with the entire industry closing hundreds of deals a year, many RIAs are already talking to technology vendors about the process of integrating software under the new ownership structure or discussing deals with their customer base. Client and Prospect Relations Company Definitely participate.

“As companies merge or get acquired, one of the most important things they come to us with is to understand how customers feel about it,” Littlechild said. “This is when they need to talk to the customer to understand how they feel about it and make sure they answer all of these questions.”

Cresset has been growing rapidly Strength of M&A Deals And hiring moves follow former veteran private equity investors Eric Becker and Avy Stein Established the company in 2017. Earlier this month, the firm hired industry dealmaker Liz Nesvold Become the company’s first president.

“We saw a huge opportunity that was much bigger than when Avy and I started Cresset five years ago,” Becker said. “We want to be where we can provide value and excellence to our customers.”

When Cresset first invested in True three years ago, the firm listed $1.2 billion in client assets from 200 households. In 2007, the firm managed $40 million on behalf of 40 athlete clients, Goodman said.

“Athletes are just starting to make the money they make today,” she said. “We really had the opportunity to understand the market and realized that there weren’t many consultants who were focused on athletes.”